How Well Is Your Mortgage Company’s Financial Toolbox Equipped for Tomorrow’s Market?

Chris Martin serves as Director of Treasury Management Sales for Western Alliance Bank's Specialized Mortgage Services Group. 

The mortgage industry is famously cyclical. That means that while our recent high interest rate environment has shifted demand downward, it won’t stay that way forever. During the lull, many mortgage businesses have invested in automated processes to improve loan origination efficiencies. This approach is a logical solution to combat rising costs and reduced revenue in the mortgage industry. 

As they reengineered processes, many companies also reduced FTEs, including their accounting teams, expecting to add staff back when business increases again. It’s what they’ve always done. 

Two key questions are: What changes, and time and resource investments, have been made to ensure that your cash management can keep pace with loan origination volume when business increases? And have you validated that your treasury management products and services meet your current needs optimally? For companies that emphasize efficiencies, adding accounting staff may not be the most efficient route — and it might not even be necessary. 

Your Bank as Treasury Management Partner: Assessing Your Toolkit

Have you heard the saying, “It takes a village to raise a child”? The same can be said for running a company. Think of the business partners your company interacts with daily. The right partners have a vested interest in your success, come to you with ideas, listen to your ideas and provide consultative advice. 

Now is the perfect time to discuss your company’s financial toolbox with your CFO, controller or treasurer to ensure you’ve implemented the right tools on the front side (loan origination) and the back end (treasury management).

Deposit Types for Mortgage Companies 

As your business grows, you gain more flexibility in managing your deposits. First and foremost, are you in the most appropriate accounts? Your options may include the following:

• Day-to-day operating accounts: Banks have invested in many technologies that can reduce your clerical work. New account types are also available to help you maximize your cash balances in the current rate cycle. It might be a good time to review these technology and account options.  
• Excess liquidity: Excess cash reserves that generally get invested through an asset manager may instead offer a resource to secure additional debt capital needs. Your banker may have suggestions on making the most of these resources. Additionally, if you are manually calculating cash positions and reconciling those accounts, it is worth discussing how to automate those functions.  
• Escrow accounts: Are you controlling where your escrow balances sit? This may be a good liquidity conversation with your banker. 

Treasury Management Solutions That Work Harder 

All businesses have treasury management requirements. The great news is that you have many options for automating your funds securely. A bank partner that listens closely to your needs and understands your processes can help your back-office operate more smoothly, allowing you to focus on your primary business functions. It’s worth examining these options: 

• Merchant processing: Have you thought through your payment card industry (PCI) validation process and tried to reduce your self-assessment questionnaire (SAQ) scope? 
• Automated clearing house (ACH) transfers: Are you using technology to push and pull data automatically for fast, accurate, efficient reconciliation? Are you making the most of security tools to protect your company and customers’ funds? 
• Payroll: How well does your payroll application integrate with other treasury processes? Do you have a backup provider in place as part of your business continuity plan? 
• Wires: Have you talked with your bank about secure FTP (SFTP) or API transactions that avoid bifurcated processes? Do you use wire transfer acknowledgments to help with reconciliation?
• Commercial card: Do you have a companywide corporate card program that allows you to control card limits and spending? Are you using out-of-pocket reimbursement features to automatically send payments to your employees once approved? Have you integrated your GL Chart of Accounts to provide automated reconciliation? 
• BAI: Have you considered the advantages that the industry-standard BAI format can have in automating reconciliation? 

Choosing the Right Banking Teammate

When reviewing your banking providers, it’s helpful to take a holistic view of the relationship. Are you working with a team that delivers white-glove service, knows your company and business, offers a wide array of treasury products and services, and prides itself on being a dedicated business partner? These differentiators mean you have a bank on your team to help maximize your success through all industry and economic cycles. 

Western Alliance Bank has a proven 15-year history as a significant lender to the mortgage industry. Over that time, we have consistently grown as both a lender and a strong treasury management partner, backed by industry-leading technology integrations and exceptional service. If you want a bank partner for your mortgage business, please contact our Specialized Mortgage Solutions Group to learn more.